Judge Yvonne Gonzalez Rogers reached a compromise that neither company requested on the seventh day of Epic v. Apple's trial. David Evans, Epics economist, was asked by Yvonne Gonzalez Rogers whether it would suffice to end Apple's anti-steering rules. These are the ones Apple uses in order to prevent developers from telling users that there is an external website where they can buy their subscriptions.
Judge Rogers suggested that she was still open to that kind of compromise on May 24, the last day of the trial. This might not please both sides and could involve Apples anti steering rules.
This is what happened today. Both sides lost. Epic lost more.
Epic Rogers won in favor of developers, but not Epic Rogers. A permanent nationwide injunction was issued that will prevent Apple from keeping iPhone users ignorant about other payment options. It could also allow developers to embed their own purchase mechanism into their apps. It all depends on the definition of a button by the courts, so expect lots of friction and experimentation.
Epic did not win the case for two reasons. First, the judge decided Epic's direct payment scheme for Fortnite on iOS was illegal. This move was intended to provoke the entire lawsuit. Epic violated its contract with Apple.
Epic did not allow Fortnite to be freed even a little.
Second, Epic cannot insert a PayPal button in Fortnite. Epics developer account was terminated by Apple after Epic violated its contract. Judge Rogers confirmed that Apple is fully within its rights to keep Epic out of the App Store.
Apple can terminate its DPLA agreement with Epic Games subsidiaries, affiliates and/or any other entity under Epic Games' control at any point and at Apples sole option, ruled Rogers.
Epic also lost $3.6 million directly, which it must pay Apple. Epic generated $12.2 million through Fortnite's direct payment system, which Rogers determined that Apple deserved 30 percent of.
Indirectly, Epic could be argued that it also lost its substantial investment in making the lawsuit a success, not only legal fees which it wont recover, but potentially hundreds and millions of dollars from players who would have played Fortnite on iOS had it not been removed from the App Store. Epics records show that the game earned $614 million in its first two years on iOS, with $52.7 million from Q4 2019.
Fortnite was removed form the App Store. It is possible that Fortnite users who had already purchased the game continued to make purchases, but it is unlikely that they did so at scale. Fortnite players with Apple hardware lost cross play, access to new events, and new items to buy in August 2020, when the game split in half.
All Epic has to prove for that money, Mark Gurman points it out, is the largest change in App Store history. (Here is our just-published history detailing the major policy changes made by App Stores. You can check it out. Epic cannot take advantage of this feature as of now.
These millions, or hundreds of millions, are nothing compared to the billions Apple could lose if the App Store changes were fully adopted and enforced. Apple earns approximately $19 billion annually from apps. $6.3 billion is in the US, where the ruling has legal weight. It wouldn't take more than the loss a few whales to cause a decline in that revenue, Chaim Gartenberg, my colleague, argues.
Epic doesn't want to present today's ruling as a win. I find that logical. Epic stated publicly that its goal was #FreeFortnite. It completely failed to achieve that goal. Fortnite on iOS remains under Apple's lock and key. Epic will appeal to its audience, rather than changing its tune.
Apple calls the decision a victory. This is despite Epics original request that the courts downgrade Epics request to them to declare Apple an illegal monopoly in violation of the Sherman Antitrust Act to just one injunction under California Unfair Competition Law. Apple is not required by the courts to allow sideloading or other app stores.
True victory would not have seen Apple lose control or watch billions of dollars in revenue slip away (or seeing Apples true nature, a brutal business entity, exposed to the rest of the world). Apple is more comfortable making smaller concessions than when it offered to Japanese regulators the possibility of allowing a certain category of reader apps to bypass its stores for payments, even though Apple holds the final word on whether or not an app is a reader app.
Jason Schreier is absolutely right. Both companies lost with billions and millions of dollars.
